Passive income does not have to mean complex strategies or years of guesswork.
Sometimes, it comes down to owning a well-run business, letting management do the hard work, and allowing dividends to land in your account while you focus on other things.
The ASX has no shortage of stocks that pay dividends, but only a handful combine income, growth, and balance sheet strength in a way that appeals to long-term investors.
One ASX dividend stock, in particular, is catching the attention of analysts right now. And if forecasts are on the mark, it could offer both a solid income stream and meaningful upside from here.
Which ASX dividend stock?
The stock in question is Universal Store Holdings Ltd (ASX: UNI). It is a specialty youth fashion retailer with a growing national footprint and a portfolio of brands that continue to resonate with its target demographic.
Despite a tougher retail environment, the company has continued to deliver solid sales growth, expand margins, and roll out new stores. Its focus on private label products, disciplined cost control, and selective store expansion has helped support profitability even as consumer conditions have fluctuated.
Importantly for income investors, Universal Store operates with a strong balance sheet and a high payout ratio, which underpins its ability to return cash to shareholders.
$860 of passive income
Universal Store shares are currently trading at $8.15. At that price, buying 2,000 shares would require an investment of $16,300.
According to a note out of Macquarie Group Ltd (ASX: MQG), the ASX stock is expected to pay total fully franked dividends of 43 cents per share in FY 2026.
If those estimates are accurate, 2,000 shares would generate $860 in cash dividends over the financial year. That equates to a forecast dividend yield of just over 5%, before the benefit of franking credits.
For investors seeking income that is backed by earnings rather than financial engineering, that is a good starting point.
Why Macquarie is bullish
Macquarie currently rates the ASX stock as outperform with a $10.20 price target.
The broker believes the market is undervaluing its shares at current levels. It said:
Outperform. Strong sales growth, improving consumer demand environment & increased conversion + penetration into private label product, alongside ongoing store rollout supporting network sales growth. Valuation: Target price unchanged at $10.20. Stock appears attractively priced, given strong sales growth & GM expansion – trading in line with long run average PE-Rel.
Based on Macquarie's price target, Universal Store shares offer potential upside of around 25% from the current share price.
This means that if you were to buy 2,000 units in this ASX dividend stock, they would have a market value of $20,400 if Macquarie is on the money with its recommendation. That's more than $4,000 greater than the price you would pay to buy them today.
